Credit Crunches, Asset Prices and Technological Change

Luis Araujo () and Raoul Minetti

No 61, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: We investigate the effects of a credit crunch in an economy where firms can operate a mature technology or restructure their activity and adopt a new technology. We show that firms' collateral and credit relationships ease firms' access to credit and investment but can also inhibit firms' restructuring. When this occurs, negative collateral or productivity shocks and the resulting drop in the price of collateral assets squeeze collateral-poor firms out of the credit market but foster the restructuring of collateral-rich firms. We characterize conditions under which such an increase in firms' restructuring occurs within existing credit relationships or through their breakdown. The analysis reveals that the credit and asset market policies adopted during the recent credit crunch can promote investment but might also slow down a process of Shumpeterian restructuring in the credit market.

Keywords: Aggregate Restructuring; Collateral; Credit Crunch; Credit Relationships (search for similar items in EconPapers)
JEL-codes: E44 (search for similar items in EconPapers)
Pages: 42
Date: 2012-03
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir061.pdf First version, 2012 (application/pdf)

Related works:
Journal Article: Credit Crunches, Asset Prices and Technological Change (2019)
Working Paper: Credit crunches, asset prices, and technological change (2018)
Working Paper: Credit Crunches, Asset Prices and Technological Change (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:61

Access Statistics for this paper

More papers in Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Maurizio Mariotti ().